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Set up Your Avalara AvaTax Account and Company Profile

This article applies to:Avalara AvaTax

Activate your AvaTax account, accept the terms and conditions, and finalize your company profile to begin using Avalara services.

Activate your account

  1. Log in to the Admin Console. Your Admin Console user name and password were sent to you from Avalara Support (support@avalara.com) with a subject line of AvaTax Account Login.
  2. The first time you log in, you're required to change your password. When you're done, click Next.
    AvaTax-Activate Account-Change Password.png
  3. On the Accept MSA tab, review the terms and conditions. Then, click Accept. This activates your account and displays your account number and license key.
  4. Save and/or print the account number and license key information. Then, click Next.
    AvaTax-Activate Account-Account Number and License Key.png
  5. On the Create Company tab, enter your basic company information. If you need help finding your company code, we've got you covered.
     
  6. Once you've entered this basic information, click Create & Activate.

After you've activated your AvaTax account, you're taken to the Get Started tab in the Admin Console. Now it's time for you to finalize the settings for the company you created when you activated your AvaTax account.

Set up your company profile

For an overview of each tab in the Admin Console, read introduction to the Admin Console.

  1. On the Organization tab, select the company you just created.
  2. On the Company subtab, move through the setup windows, providing missing information. 
  3. Choose the type of company for your company tax profileHoverTT.png
    • Stand-alone company
      • A stand-alone company maintains its own tax profile (jurisdictions, tax codes, tax rules, and items). It also maintains an independent transaction history for reporting and tax returns purposes.
      • Stand-alone companies aren't part of the parent company/child company relationship that defines a multi-company organization.
    • Part of a multi-company organization
      • A company in a multi-company organization is either a parent company or a child company.
      • A multi-company organization allows a child company to inherit a tax profile (jurisdictions, tax codes, tax rules, and items) from a parent company. In addition, the transaction history of a child company can be combined with that of its parent company for reporting and tax returns purposes.
    1. Select or create the parent company. A stand-alone company doesn't have this relationship. To create the parent company/child company relationship in a multi-company organization, first add the parent company. Once a parent company is added and saved, a child company can be added by selecting its parent company.
      • Parent Company: Select  <Create Parent>  to add a parent company. The first company added in a multi-company organization is a parent company.
      • Child Company: Select a company to act as the parent of a new child company. The relationship between a parent company and child company allows a child company to combine its transaction history with its parent company for tax returns and tax return reports and to inherit its tax profile from its parent company.
    2. Define the parent company/child company relationship in a multi-company organization. A stand-alone company doesn't have this relationship. A parent company must be selected to establish this relationship.
      • A separate reporting entityHoverTT.png is a companyHoverTT.png that reports and files its transaction history independent from any parent company or child company with which it’s associated.
        • Choose Yes to allow a child company to maintain its transaction history independent of its parent company.
        • Choose No to allow a child company to combine its transaction history with its parent company for reporting and tax returns purposes.
      • A tax profile is the collection of jurisdictions, tax codes, tax rules, and items that define the taxing policy of a company.
        • Choose Create Tax Profile to allow a child company to create and maintain a tax profile independent of its parent company.
        • Choose Inherit Tax Profile to allow a child company to inherit a tax profile from its parent company.
  4. Identify the company with a company name and a unique company codeHoverTT.pngOnce saved, the company code can't be edited.
    • Company name: Type a name for the company. The company name identifies the company in AvaTax. It should be unique and should match the name in your accounting software.
    • Company code: Type a unique code for each company. The company code must match the code used by your accounting software to identify the company. See all about company codes to learn how various types of accounting software identify a company.
  5. Select both a default country and a base currency.
    • Default Country: The default country is the country AvaTax uses for reporting purposes. It’s also used by AvaTax Global customers.
    • Base Currency: The base currency is the currency AvaTax uses for reporting purposes. It’s also used by AvaTax Global customers.              
  6. The rounding levelHoverTT.png controls how AvaTax rounds the tax amount for a transactionHoverTT.png. AvaTax can round tax amounts at the line level or document level.
    • Line-level rounding
      • Rounds the tax amount to two decimal places for each tax line
      • Discards the rounding difference
      • Adds the tax amounts of each line together to get the total tax amount
      • Occasionally, the sum of each line calculated is a penny less or more than with document rounding
    • Document-level rounding
      • Calculates the tax amount for each line (without rounding), adds those amounts, and then rounds the total to two decimal places
      • Eliminates the occasional rounding inequality experienced with the line-level method by redistributing the rounded amounts
  7. The freight and handling tax dependency level controls which line items your freight and handling taxability depend on. This selection controls how close a match the destination address needs to be to the dependent line to be considered related.
    • Choose Entire Document to make the taxability of freight and handling dependent on all line items in the document.
    • Choose Same State to make the taxability of freight and handling dependent on all line items that have the same destination state as the freight or handling line.
    • Choose Same Tax Region to make the taxability of freight and handling dependent on all line items that have the same destination tax region (same set of taxing jurisdictions) as the freight or handling line.
    • Choose Same Address to make the taxability of freight and handling dependent on all line items that have the same destination address as the freight or handling line.
  8. Click Validate to validate HoverTT.pngthe company address. In all other cases, the company address is optional. Type the address for the companyHoverTT.png. If the Separate Reporting Entity option is set to Yes for a company, complete at least the required fields.
  9. Type the Business Tax Identification Number (TIN) or Business Identification Number (BIN) for the company.
    • The business TIN or taxpayer IDHoverTT.png is a unique, nine-digit identifier assigned to U.S. companies for tax reporting purposes. For a company that's a separate reporting entity, a business TIN or taxpayer ID is required when a company is participating in the Returns program or when a company is participating in the SSTP. In all other cases, the business TIN is optional.
    • The business identification numberHoverTT.png is a unique identifier assigned to a non-U.S. company. This is normally the BIN or value added tax (VAT) identification number. The BIN is optional.
  10. Type the information for the primary contact for the companyHoverTT.png. If the Separate Reporting Entity option is set to Yes for a company, complete at least the required fields.
  11. Enter a locationHoverTT.png for the companyHoverTT.png. You must assign a location code to the company during company creation. If you don't use a location code internally because you have a single location, you can use the company codeHoverTT.png entered previously. If you have multiple locations, enter the location code of the default location for the company. Once saved, the location code can't be edited.
    1. Type a location code and change the start date or end date. 
    2. The Type defaults to Location.
    3. Select a Category for this location.
    4. The Default Outlet Code of this location is selected and unavailable because this is the first location for this company.
    5. Optionally, type a Location Description.
    6. Complete at least the required fields.
    7. Click Validate to validateHoverTT.png the address information.
    8. AvaTax selects and displays the tax jurisdictions for this location.
    9. Type additional location information depending on the address for the locationHoverTT.png.
      • If you are not a Returns client, when asked “Is this specific location registered with the proper taxing authorities to report sales and use tax?”, accept the default value No and click Next to move to the next screen.
      • If you are Returns​ client, when asked “Is this specific location registered with the proper taxing authorities to report sales and use tax?”:
        • Accept the default value No and click Next to move to the next screen. Choosing No makes the Outlet Name and DBA Name optional.
        • Select Yes and complete the screen as required, based on the city and state information associated with this location. Choosing Yes makes most fields required. Generally, a good resource for this information is the hard copy return provided by the taxing jurisdiction.
  12. Designate a company as a test company to use it for testing purposes only. Test companies don’t generate liability worksheets, Returns calendars, or tax notices. When you’re done testing, change this value to No to use the company for actual transactions. Use a test company to test:
    • Integration of AvaTax with your accounting software. For instance, use it to send a test transaction.
    • Changes to the tax profile of a company.
    • Data importing.
  13. You must activate a company before AvaTax processes transactions and validates addresses. For more information, see activate a company. Review the companyHoverTT.png information for errors or omissions.
    1. To change or add information, click Back to reach the appropriate screen.
    2. Once the company information is verified, click Finish to save the company.
    3. Click Print Preview to view or print a summary of the company and account information.
  14. Click Save when you're finished providing the rest of your company information.

Tell us where you collect tax

Add nexus jurisdictions to tell AvaTax when and where to calculate and report taxes for your company. If you've already added nexus jurisdictions in AvaTax and need to make changes, you can edit nexus jurisdictions.

Nexus is the connection or relationship a business has with a taxing jurisdiction in which it sells products and services. This connection obligates the business to calculate, collect, report, and remit taxes. State and local authorities have varying definitions as to what constitutes nexus and who is liable for collecting and remitting sales and use taxes in their jurisdictions. 

Typically, a business must have a “substantial physical presence” in a taxing jurisdiction to have nexus there. The following items may constitute a “substantial physical presence” in a taxing jurisdiction, and therefore an obligation to calculate, collect, report, and remit tax:

  • A corporate office, storefront, or remote sales office
  • Remote employees working from home on the company payroll
  • Owned or rented warehouse space containing owned inventory
  • Owned inventory leased to a customer
  • Sales or marketing representatives making regularly scheduled visits
  • Delivery of product by a company-owned vehicle

Rules governing what constitutes nexus vary from jurisdiction to jurisdiction. Determining exactly how a rule applies to your business is critical. If you're at all uncertain about where you should be collecting and remitting taxes:

  • Contact the appropriate state or local tax agencies. Each state defines the rules for when a business is required to collect and remit sales and use tax. Therefore, each state and their tax agencies are the source for the final decision regarding if you need to collect and pay sales tax based on your business practices.
  • Contact your Customer Account Manager (CAM) for more information about Avalara Professional Services. Avalara provides a variety of professional tax services, including nexus studies, voluntary disclosure agreements, and tax registration services.

Add nexus jurisdictions

 

  1. On the Organization tab, click the Nexus Jurisdictions button Picture of the Jurisdictions button for your new company.
  2. On the Country Jurisdictions screen, select the check box next to applicable country names.
    • Selecting CANADA turns on the calculation of Canadian Goods and Services Tax (GST)HoverTT.png for products or services delivered to Canadian customers. Selecting UNITED STATES in Country Jurisdictions doesn't enable any specific tax calculation behavior.

  3. Change the Begin Date or End Date as needed. For more information, see the Jurisdiction begin dates and end dates section above.
  4. Click Save. The page refreshes, and the Select Jurisdictions button in the row for each country you selected becomes active.
  5. Click Select Jurisdictions for any country.
  6. On the State or Province Jurisdictions screen, select the check box next to applicable state or province names.
    • Selecting Canadian provinces and territories turns on the calculation of Canadian Provincial Sales Tax (PST) and/or Harmonized Sales Tax (HST) for products or services delivered to Canadian customers. If you're a GST/HST registrant, you must select the 5 participating HST provinces: New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island. For more information, see what is GST/HST?
  7. For the United States, change the Tax Type selection if desired. For more information, see about tax types.
  8. Change the Begin Date or End Date as needed.
  9. Click Save, but don't leave this page. Depending on the states you're registered in, you may need to tell AvaTax which local jurisdictions you're registered in as well.

Add local jurisdictions

Some states have local jurisdictions with additional tax rules. Local jurisdictions include counties, cities, and special tax jurisdictions in the United States. Tell AvaTax which local jurisdictions you're registered in to get the most accurate rate possible. For more information, see about local jurisdictions.

To add local jurisdictions:

  1. On the State Jurisdictions screen, after you select and save the states to register in, click Select Jurisdictions for any state for which the button is active.

    AvaTaxCalc-Organization-TaxProfile-SelectJurisdictionsforaStateorProvince.png
  2. On the Local Jurisdictions screen, click View Jurisdictions to view the compulsory local jurisdictions, if desired.
  3. For each state in which you need to select local jurisdictions, choose how to maintain optional local jurisdictions:
    • Selective
      • You select and maintain the optional local jurisdictions. Any new optional local jurisdictions that are created and in which you are registered must be added manually. AvaTax only applies tax for transactions in these jurisdictions.
      • Find local jurisdictions for a state based on a company address using the jurisdiction finder.
    • All
      • AvaTax selects and maintains all optional local jurisdictions. Any new optional local jurisdictions are added automatically. AvaTax applies tax for transactions in all local jurisdictions.
  4. If you choose Selective, the page will reload and a list of county, city, and special tax jurisdictions displays. Select all jurisdictions in which you wish to register.
  5. Change the Begin Date or End Date as needed. For more information, see the Jurisdiction begin dates and end dates section above.
  6. Click Save.

Use the jurisdiction finder

The jurisdiction finder provides a straight-forward way to identify local jurisdictions using a company address.

To use the jurisdiction finder:

  1. On the Local Jurisdictions page, select Selective. The jurisdiction finder becomes active.
  2. Click Jurisdiction Finder.
  3. Select the Type of address for the jurisdiction finder.
  4. Enter the required information based on the Type you selected.
  5. Click Next.
  6. AvaTax selects the tax region for this address or ZIP Code.
    • If the tax region is applicable to your business, click Save & Finish to add the jurisdiction(s) and exit the jurisdiction finder or, if you would like to search for another jurisdiction, Save & Add More. (No jurisdictions are officially added until you click Save & Finish.)
    • If the tax region is not applicable:
    1. Click View and select Neighboring Tax Regions.
    2. Choose a neighboring tax region to update the list of jurisdictions, and then select the jurisdictions desired (County, City, or Special tax jurisdictions).
    3. Change the Begin Date or End Date for each jurisdiction as needed.
    4. Click Save & Finish to add the jurisdiction(s) and exit the jurisdiction finder or, if you would like to search for another jurisdiction, Save & Add More. (No jurisdictions are officially added until you click Save & Finish.)

Next steps

You're finished with your initial settings in AvaTax, now install and configure AvaTax for your accounting system.